On the global stage, New Zealand’s economy has obvious vulnerabilities: its reliance on export, uncertainties affecting major markets and political instability across many regions, complicated by a lack of coherent global action on climate change.
This Budget has focused on climate change, land use and national infrastructure. With a capital boost of over $3b, the aim is to create opportunities for businesses, regions, iwi and others to transition to a sustainable low-emissions economy.
The $229m Sustainable Land Use Package will fund projects to protect waterways and wetlands and support farmers and growers in using their land more sustainably. It provides funding for advice to farmers; support for Māori agribusiness and farmers changing over to more environmentally sustainable and higher value production; improving on-farm emissions data and upgrading decision and regulatory tools; protecting high value food exports; and updating the country’s official assurances system. An additional $49m is allocated to help transform the forestry sector and support the One Billion Trees programme.
$1b over the next two years is allocated to modernising KiwiRail. Reduced carbon emissions and increased regional business opportunities are key drivers. If taking heavy traffic off our roads reduces our road toll, the payback will be in human capital.
Innovation is seen as the key to assist New Zealand industries in the transition to an economy high in productivity but low in emissions. The challenge is for businesses to be more innovative and New Zealanders to adapt to changing job markets.
The R & D legislation born out of last year’s budget has passed and it’s up to Kiwi businesses to take up opportunities there. The Budget allocates $157m to support the “Commercialisation of Innovation” package of initiatives to invest in research and science. An “Innovative Partnerships Programme” seeks to attract globally leading firms and innovators. “Business Connect” establishes a cross-agency digital platform of business-focused services.
New start-up businesses have been spotlighted as likely to run with some of these initiatives, the Minister for Research, Science and Innovation calling them “the ultimate champions of innovation that often introduce more radical, disruptive innovations than more established firms”.
But how does a start-up expand? The Budget establishes a $300m fund to support venture capital investments taking “mid-size” start-up businesses to the next level. This is designed to stimulate growth and help businesses remain onshore, reducing pressure on companies to sell prematurely to overseas buyers.
The initiatives also fund vocational education and training. These include reforms to boost apprenticeships and trade training, increased subsidies to Tertiary Education Organisations, wage subsidies, and funding for an “Industry 4.0” demonstration network to help businesses embrace smart technologies and data driven solutions.